EUR/USD: neutral bias

EUR/USD was setting daily highs in the $1.3615/20 area for 4 days in a row. So far the bulls failed to push the prices above this area. The pair remained inside the daily Ichimoku Cloud. Yesterday euro closed below Kijun-sen and below previous resistance at $1.3560.

Yesterday euro should have rallied on improvement in the euro zone’s PMI, but the currency was discouraged by strong US data which bolstered expectations that the Fed will reduce monetary stimulus. In addition, there’s still a big divergence in economic growth within the euro area. In this situation the biggest negative risk for the pair is that the ECB will drive EUR/USD lower. The euro zone’s producer prices are due at 10:00 GMT and analysts forecast contraction. Lower producer inflation will justify the central bank’s dovish approach.

For now the picture is neutral. Major moves aren’t expected ahead of the ECB’s meeting on Thursday and NFP on Friday. This time market players may regard $1.3570 resistance as an opportunity to sell the single currency. Support lies at $1.3500/3490, $1.3425, $1.3468.